Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Friday, May 2, 2014

May 02, 2014

International Trade

CASA received two 700 thousand tons of basic food
  • Over 2,783 tons of staples such as milk, cream, meat, wheat flour and other products from Albalinisa for Corporación de Abastecimientos y Servicios Agrícolas (CASA)
  • 283 thousand tons of frozen meat from Strading for Proveeduría y Distribuidora
  • 251 tons of milk and cream from Nestlé Brasil for subsidiary in Venezuela
  • 132 tons of personal hygiene products from P&G Chile for subsidiary in Venezuela
  • 87 tons of personal hygiene products from Unilever Brasil for Unilever Andina
Bulk Loads
  • Over 92,000 tons of yellow corn on three ships from Brazil and the US for state distributor CASA and CARGILL.
  • 27 thousand tons of yellow corn from United States, Liver Trading for Industrias del Maíz y Seravián
  • 1.601 tons of corn seed from Monsanto Brasil and Pionner Hi Brad for CVA Empresa Comercial e Insumos & Suministros and Monsanto Venezuela
  • Over 1.400 tons (3.000 heads) of cattle from Brasil for Inversiones Machocapa y Frigorífico Super Carne
  • 4.123 tons of Construction Materials from Yakima Trading Corporation for PDVSA Industrial
  • Over 3,898 heads of cattle from Brazil to several consignees in Venezuela.         

Logistics & Transport

Venezuela not paying airlines U$3.9D billion promised: IATA. Venezuela’s government isn’t honoring its pledge to provide as much as $3.9 billion to airlines with bolivars trapped in the country, said the International Air Transport Association, known as IATA. President Nicolas Maduro last month authorized the release of dollars owed to 24 airlines operating in the country, basing the total on the official exchange rate at the time of the ticket sales, Venezuelan Airlines Association President Humberto Figuera told reporters March 28. “Since then there has been very little progress,” Tony Tyler, IATA’s General Director, said in a statement published on the organization’s website today. “The situation is unacceptable.” At least 11 airlines have cut capacity on Venezuelan flights in the past year, some by as much as 78%, as the currency controls made it increasingly difficult to expatriate local earnings, according IATA. Air Canada stopped flying to Caracas in March. The value of revenue trapped in bolivars is being whittled away by the highest inflation in the world and frequent devaluations of Venezuela’s currency. Colombia’s AVIANCA has about U$D 300 million in cash in the country, or about 40% of its total cash holdings, according to company filings and conference calls. Panama City-based COPA has U$D 487 million in Venezuela. (Bloomberg,

Oil & Energy

Fitch downgrades Venezuela's CITGO outlook to negative. Fitch Ratings has affirmed the Issuer Default Ratings (IDR) for CITGO Petroleum Corporation at 'BB-' and the company's senior secured ratings (including the revolver, term loans, and fixed-rate industrial revenue bonds [IRBs]) at 'BB+'. The Rating Outlook has been revised to Negative from Positive. The recent downgrade of CITGO's ultimate parent PDVSA is the main reason for the revision in Outlook at CITGO. Approximately U$D 1.08 billion in balance sheet debt is affected by today's rating action. Fitch downgraded the IDR of PDVSA from 'B+' to 'B' and revised its Outlook from Stable to Negative, citing PDVSA's inextricable linkage to the government of Venezuela, which in turn has experienced heightened macroeconomic instability, delays in implementation of policies to address rising inflation, distortions in the foreign exchange (FX) market and deterioration in external accounts. (Latin America Herald Tribune,

PDVSA will reduce crude oil exports and increase sales through auctions. Venezuela's government oil company PDVSA will reduce crude oil deliveries by 20% to regular clients from terminals in Eastern Venezuela and increase by 50% the amount of crude oil and byproducts it sells through auctions. Regular clients include US firms Phillips 66, Valero Energy y CHEVRON, Cuba's CUPET, PETROCHINA, India's Reliance y Essar and its own US refining network CITGO Petroleum. (El Mundo,; El Economista,; Ultimas Noticias,


A report by the Ministry for Planning -obtained by the Latin American Herald Tribune - confirms production falls across almost all industries:
  • Cement production decreased at least 11% from last year.
  • Steel production was down 48% (p.12) and Reinforcing Steel Bars were down 81%.
  • Bauxite production was up, but that was after several months of no production (accumulated stockpiles?).
  • Aluminum production (which the Bauxite is for), was down 16%, but worse, is down 50% in 2 years (p.15).  Production of aluminum conductors by CABELUM (for electrical production and distribution), fell 66.8 % since March 2013.
  • Gold production has fallen 64.1% in one year.
  • Oil production has barely moved (and has some seemingly ugly falls) at 2.878 million barrels a day in February of 2014.
  • Car sales were 817 units in February and 1,675 in March. 12,039 cars were sold in March 2013. (p.70)
The financial graphs are also interesting.
  • Financial reserves down from $29 to $20 billion in one year.
  • Venezuela's borrowing cost: 9.81% over US treasuries compared to Mexico at just 1.54% more than the US government.
  • "Real wages" in 2007 terms are only 628 bolivars a month (of course, that isn't "real" when reflecting the black market fall, or even this month's increasing use of SICAD 2 at 49 bolivars to the dollar while the official rate remains at 6.3.

Polar halts pasta production. Venezuela's largest private company, Empresas Polar, says it is halting production of pasta due to delays in foreign currency allocations from the government. "The Polar Food plant in Maracaibo, which makes the pasta brands Primor and Gran Senora, is obliged to temporarily suspend operations due to a delay in currency payments," said Polar. (Reuters,; Bloomberg,; Fox News,

Venezuela to crush cars, bikes to build houses. Venezuela said on Tuesday it would start crushing abandoned cars and bicycles to provide raw materials for housing construction and supplement drastically reduced amounts of local steel. "We have sent 10,485 automobiles, 9,651 motorbikes and 539 bicycles to the national steel industry," Maria Martinez, a deputy justice minister, said during a visit to an abandoned car deposit outside Caracas. That quantity of steel, she said, could be used for rebars, which reinforce concrete, in the construction of tens of thousands of housing units. (Reuters,

Hit by forex issues, El Universal cuts print edition again. The extinct Foreign Exchange Administration Board (CADIVI) –now revamped as the National Foreign Trade Centre (CENCOEX)- has delayed issuing authorizations for purchasing foreign currency to a point in which a newsprint cargo forwarded to El Universal daily newspaper –which is vital for the daily operations of the news outlet- has not passed through customs. Therefore, El Universal has decided to take urgent steps and is further rationing newsprint. (El Universal,

Economy & Finance

Maduro decrees a 30% minimum wage hike. Venezuela raised the minimum wage by 30% on 1 May, and raised pensions by the same amount. The increase is below the level of annual inflation, which official figures put at 56.2% for 2013. In an address to workers from different key sectors, Mr. Maduro said he hoped that "by the end of the year, we will be choking off and overcoming (...) inflation". Critics say that while the new minimum salary amounts to U$D 675 at the government-set exchange rate, it adds up to little over U$D 67 at the black market rate. Opposition leader Henrique Capriles said the 30% raise was "insufficient" and that a real improvement would only be achieved if wages were lifted above the level of inflation. The increase comes just months after the government raised the minimum wage by 10%. The president also did not rule out another raise in the last trimester of the year, at which point he promised to "re-assess" wages. (BBC:; Veneconomy,; Bloomberg,; Fox News,

Venezuela surges toward 60%, inflation lowers 2014 growth estimations. Venezuela's annual inflation rate has surged toward 60% after a sharp jump in March attributed to violent protests that have left at least 41 people dead, the country's central bank said. A statement on the bank's website reported that inflation in March rose to 4.1% last month, up from 2.4% in February, blaming the rise on the protests over rampant crime, inflation and shortages of essential goods. Inflation now stands at 59.35%, against 57.3% in February, a record in 15 years. The report said food and drinks had seen the biggest price rise in March, climbing by 6.1% compared to February. The bank also lowered its figure of gross domestic product in 2013 to 1.3%, against the 6% that had been forecast. For the second consecutive month, the central bank also declined to release figures on its scarcity index, which measures shortages. The last available scarcity index figure in January showed a shortage rate of 28%.(The West Australian,
UN-ECLAC now predicts Venezuela's economy will shrink 0.5% in 2014. The UN Economic Commission for Latin America and the Caribbean is now projecting Venezuela as the only country in the region with negative growth, and will shrink by 0.5%, More in Spanish: (Ultimas Noticias,

Gold Reserve says decision closer on $2 billion Venezuela expropriation. Gold Reserve Inc. has announced that the arbitral tribunal at the World Bank's International Centre for Settlement of Investment Disputes (ICSID) hearing their case against Venezuela has requested both parties to submit their costs by May 26, 2014. “This request to submit the costs associated with our arbitration with the Bolivarian Republic of Venezuela brings the arbitration process one step closer to completion,” said Gold Reserve President Doug Belanger. Gold Reserve is claiming damages arising from violations of three provisions of the Canada-Venezuela bilateral investment treaty resulting in the effective expropriation of Gold Reserve's sizable investments in the Brisas gold/copper project and the Choco 5 property (Latin American Herald Tribune,


Maduro claims the working class would rise up against any "non-Bolivarian" government. During a May Day speech to pro-government labor organizations, President Nicolás Maduro said that if he were deposed the working class would rebel; and threatened that "whether this revolution continues to be peaceful does not depend on us, it depends on a crazed minority on the right that is determined to destroy the Bolivarian Revolution". He added that if he were deposed "the people would decree a general strike and enter into civilian and military insurrection". More in Spanish: (Infolatam)

US charges Venezuela is "permissive" toward terrorism. A US State Department report on worldwide terrorism in 2013 says there is credible information that Venezuela has established a "permissive atmosphere" that benefitted such groups as Colombia's FARC guerrillas and Lebanon's terrorist HEZBOLA organization. The same report says Venezuelan authorities "are not cooperating fully" with US antiterrorist efforts. The report also cites Venezuelan ties to Iran. More in Spanish: (El Universal,

The United States says it is "critical" for results to emerge from Venezuela's dialogue; Maduro lashes back. US Assistant Secretary of State for the Western Hemisphere Roberta Jacobson has said it is "critical" for results to emerge from political dialogue in Venezuela. Maduro quickly replied: "I reject and condemn insolent interference from the United States", and added that "US Secretary of State John Kerry is threatening Venezuela by saying 'As long as there is dialogue in Venezuela, the US will not take action against Venezuela,,, these are unfortunate words and I am going to bring it up at the dialogue table and at UNASUR", (El Universal,; and more in Spanish: AVN;

The American Embassy in Venezuela resumed the issuance of tourist visas, according to its web page. The Embassy reports that even though it does not have a full staff, it can now once again issue a limited number of appointments for first time tourist visa requests (B-1/B-2). (Veneconomy,

El Salvador's president in Venezuela for talks. The elected president of El Salvador, Salvador Sanchez Ceren, is in Venezuela for talks on expanded technology, educational and trade agreements. More in Spanish: (AVN;; Ultimas Noticias,

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.

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